The new prime minister has a complicated relationship with the nation he governs. Like most leaders, Christopher Luxon finds that the country that voted him into power happens to be the best in the world: he celebrates us for the glint in our eye and fire in our soul. We climbed Everest, helped split the atom, charted waka across the ocean and are blasting rockets into space.
Yet we’re also a “negative, wet, whiny, inward-looking country that’s lost the plot”, a critique he returned to a number of times during the election campaign. In his inaugural state of the nation speech, Luxon warns that our national state is fragile, as if we might burst into tears when Australia makes a cutting joke about our outfit.
Why so fragile? Many reasons, and Luxon listed them all, some of them multiple times. Benefit numbers are up, the education system is failing, inflation is still higher than in many of our peer nations so interest rates are high and likely to stay there – meaning lower growth and higher unemployment – longer wait times in the health sector, government spending is up, debt is up, median incomes are $20,000 lower than Australia’s, outward migration is at record levels – much of it, not coincidentally, to Australia.
It’s nearly impossible to build anything and our infrastructure is falling apart around us. Finally – and fundamentally – our productivity is low: we are now “less productive than vast swathes of the former Eastern Bloc, including Poland, Slovenia, Slovakia, and Lithuania”. Also, benefit numbers are up.
How could such a fabulous nation – the splitters of waka, paddlers of Everest, climbers of atoms – degenerate into such a basket case? In Luxon’s opinion, there hasn’t been enough straight talk with the New Zealand people. Too much PR and spin. But he’s got the guts to admit that our problems are entirely the fault of the previous government, and the most immediate solution is for National to crack down on beneficiaries. The country needs tough love, especially those of us enjoying the free ride and lavish existence of life on a welfare payment.
This was a campaign speech: a reprise of National’s greatest hits from last year with some new revelations gleaned from being in power. It’s an attack on Labour – currently licking its wounds in the darkest recesses of the opposition offices – but Luxon is also campaigning against his coalition partners.
David Seymour and Winston Peters have dominated the news since the coalition was formed. National felt it was time to remind the public that the Prime Minister existed and to showcase his new communication style. Instead of speaking like a management consultant brought in to announce massive layoffs – a manner the public mysteriously failed to warm to: who doesn’t love management consultants? – Luxon spoke like a normal human, or at least a plausible facsimile of one.
Learning from Ardern
And he borrowed a rhetorical technique from a very specific human: his predecessor Dame Jacinda Ardern. The great communicator always acknowledged that people might disagree with what she was doing, and that she heard that, and understood it and respected it.
Now, this is Luxon’s message as he warns us there are hard choices to be made in turning the economy around after the expensive kindness of Ardernism. Things look bad. There are tough times ahead for all of us – except for landlords, who are getting a generous tax cut.
Since forming a government, National has assembled a list of charges against Labour and its fiscal profligacy: many of them dubious, some of them more credible. In the latter category is a series of actuarial studies modelling changes to the welfare system over the past six years.
These revealed that the recipients of the Jobseeker Support payment were now likely to spend an average of 13 years on a benefit before retirement age. Long-term estimates for the numbers of youth beneficiaries and solo parents have also soared. National has instructed the Ministry of Social Development to apply more sanctions to beneficiaries not actively seeking work, and later this year, a traffic light system will be introduced that will mean people in breach of their obligations will lose their payments.
It is another black mark against the previous government that it saw benefit numbers surge during an acute labour shortage, while businesses were closing because they couldn’t hire staff.
It was the ideal time to help long-term welfare recipients into paid employment. But that window has closed as those positions have been filled by the torrent of new migrants. We’re now in a downturn. Unemployment is increasing (although it’s still low by historical standards) because interest rates are high, and set to remain so.
With more unemployed chasing fewer jobs, there’s less point in browbeating long-term beneficiaries into polishing their CVs and learning how to tie a tie: they can’t interview for roles that aren’t there.
Vague Solutions
The Key government announced welfare crackdowns as a matter of routine: in its first term, it felt like barely a week went by without then-social welfare minister Paula Bennett getting tough on sickness beneficiaries or publicly musing about forced sterilisation. It’s discouraging to see the new government resorting to the same stunt so quickly because, while Sir John Key’s ministers were cracking down on welfare, they were failing to address the real problems Luxon refers to now: crumbling infrastructure, low productivity, low-value exports. That era’s rock-star economy was a property bubble with a side hustle of shipping milk powder to China.
Luxon’s solutions to these persistent challenges range from vague to non-existent – to fix them he would have to fix the distortions in our tax system and the dysfunction in our markets, and shift the focus of our economy from property to exports.
Success would take him a fair way up Everest in the rankings of our post-war prime ministers, but it would require some tough love for the wealthiest and most comfortable members of society, instead of the poorest, and call for genuine political courage instead of media posturing.
The nation will remain fragile until its leaders can find some backbone.
